Nigeria’s electricity sector is on the cusp of a major shift with the Nigerian Electricity Regulatory Commission (NERC) pushing forward its proposed net billing framework.

The policy, designed to allow consumers with solar installations to feed excess power into the grid, is being hailed as a game-changer for energy access, reliability, and sustainability.

But it also raises tough questions about market dynamics, liquidity, and infrastructure readiness.

In this exclusive interview with Naijaonpoint, Chief Executive Officer of New Hampshire Capital Limited, Odion Omonfoman, explains the opportunities and risks tied to NERC’s plan. He highlights how the rise of distributed solar could reduce dependence on the national grid, create new revenue streams for businesses, and improve electricity access for underserved communities.

However, he warns that the greatest resistance may come from the Generation Companies (GenCos), who risk losing demand for their bulk power as DisCos and consumers turn increasingly to local, renewable sources.

Naijaonpoint: How significant is the proposed net billing arrangement of NERC, especially in the context of the energy transition plan for Nigeria’s energy sector?

Odion: I think the first thing is to understand what it means in terms of what NERC is trying to do. I think what NERC is doing is that if you have solar panels or solar systems above 50 kilowatts and up to 5 megawatts, you can actually export that to the grid. You find out that people who have that level of capacity are usually active in businesses or other businesses that use those as power.

So, you’ve got commercial and industrial customers who are replacing their diesel generators with solar. So, NERC is now providing an opportunity for them to be able to sell their excess generation capacity from their solar. Or when plants are down over the weekend or at night, they can put that to the grid.

So that’s positive because you’re referring to concepts like distributed energy generation, which is closer to the end users as opposed to having to buy power from the national grid. So, it’s positive because then you don’t realise that excess power is not wasted, excess free power, and that these companies are currently not utilising, it’s not wasted. And then they can also earn some revenue from their current installation.

So, it’s positive, it’s massive because it also means that when they supply the local grid, those people don’t have to then rely on their own diesel generators or petrol generators. So, it’s something that definitely improves the environment.

And more importantly, it speaks to energy reliability and access, particularly for underserved areas that do not have a reliable grid.

Naijaonpoint: So, based on that, how do you think it solves the energy challenges, especially the liquidity aspect of the energy industry, based on what you said?

Odion: Well, it doesn’t solve the energy challenges totally. It addresses some of the issues in terms of the availability of electrons for people to use.

So, the issues of liquidity and even technical issues would arise. So, we can solve that. The most important thing is that this is already a context that has already been spent by these companies.

So, for instance, if somebody wakes up one day and says, “I’m going to put 50 kilowatts to sell power to the grid, his first instinct is that he’s putting 50 kilowatts or up to 1 megawatt to spare power to himself.” It’s the excess that he must sell. So, this is like an extra, right?

So, we expect that from a liquidity perspective, it would mean that if they’re selling the power to the grid, or the disco rather, we would expect that the disco would have factored in means of making sure that customers are able to pay. We would also expect that the tariff, the two-way tariff system, the tariff that the local disco will charge the end-users, and the tariff that the power company, the prosumer rather, will set up the energy to the disco.

I would expect that the tariff structure is well-designed, where I’m sure that the customer, whoever is generating the power, is able to sell that excess. I don’t know whether I would be selling that exhaust because there are already some costs. I won’t factor in the cost of loss, the concept of loss.

But what I would be concerned about is the ability of the disco to pay for that power that has been sold to the disco. This would then mean that the disco must ensure that technical losses are minimal, and that customers or consumers who sell power are metered, resulting in high collection efficiency.

Because it’s not going to be in the wide area, I would expect that. I mean, it will be in the very local area, maybe on the feeder, or even something smaller than the feeder. So, I guess the Disco can improve collections along those lines and make sure they’re able to pay for the power that they buy from the entities.

Naijaonpoint: How prepared are the Discos, in your opinion, to handle the complexity of integrating the prosumers into the national grid?

Odion: That’s a multimillion or billionaire question. Are they really prepared in the first place? Because I think the biggest challenge still in place is the ability of the local distribution network to import the power into the network in a manner that does not trip the network, number one.

I believe it would be useful to effectively distribute that power to end users and then make sure the power is consumed. There would also be issues of the customer injecting into the disco network. Is the feeder that they are putting the power feeder technically okay?

Is it reliable? And can the feeder take the additional generation that’s injected into it? So, the technical issues, the interconnection issues, are where the tariffs lie.

The quality of the existing local distribution infrastructure is another big challenge. I don’t think the ability or willingness of customers is a factor. It’s about the ability of discos to ensure that they collect what they sell to customers.

So those are the big challenges arising from this. And any disco that wants to go into this would need to make sure that those three aspects get addressed before they even consummate this. But the other weak point, which the NERC looks at, the C&I customer may not even need to.

If you look at companies, most companies are, I mean, they can sell to a next-door company. Right?

In other words, you don’t have them put on the local discos network. I know this is no longer net-futuring again, because net-futuring means I buy part of the grid, and I sell part of the grid. It has a bidirectional metre, and that’s what I pay.

If at all, there’s a payment, I have revenues. But beyond that, you should look at expanding such that these nearby entities are also able to get nearby customers, right? Using maybe dedicated infrastructure to disperse this power, excess power.

Naijaonpoint: So, what are the technical challenges to metering grid stability, interconnection standards that need to be addressed before NERC can put this regulation into use effectively?

Odion: So, I think the technical challenges are pretty straightforward. For instance, if you talk about metering, you need to address the metering gap in that area.

First of all, you have a lot of customers who may not be metered. You can’t do this when you don’t have all your customers or users that are properly metered.

The second is, even if the company wants to export the power from a metering perspective, you need to have meters that are reliable in the manner that they can record the input and outputs, the import and export bidirectional meters, so to speak. I don’t know if that exists in this market, but in any case, that would be something to make sure we have accurate bidirectional metres.

And if you then talk about the elephant in the room, which is interconnection, as in interconnecting C & I, that’s the power generators, the facilities, bidirectional metres into the distribution network. There has to be a lot of integration to make sure that the power generated by the customer meets the technical requirements of the local grid.

In other words, both the threshold is okay, the correct threshold, and the other technical issues that should not affect the local grid or cause a destabilized local grid. We also need to make sure that the infrastructure to deliver the power to end users is really enhanced, because you can’t afford to pay for the power. So, they can’t afford to allow for leakage losses, technical losses, and all that.

And then, more importantly, the ability of the utility to make sure that the feeder itself, or whatever line you want to use, can take in the additional power.

Because feeders are from trains, and we also have a maximum load that they can carry. I would expect that this would be done at 11 kV levels, or maybe up to 11.5 volt levels. But you want to be sure that the infrastructure, right, they’re able to take in the power on that.

Particularly when you have multiple people, multiple companies, and multiple consumers that inject the power into it. And then lastly, there’s also protection. We talked about it, and we know we can’t stress this enough.

At the end of the day, we need to make sure that if the consumer’s facility has issues, those issues can be isolated from the local grid without disturbing it. Or if the local grid has issues, those issues do not flow back and affect the customer’s generation facilities.

You know, it spikes currents, it spikes all those issues. But it’s not a walk in the park. We have to go through that market.

We have to go through it several times. The last thing I’d like to say is that the biggest threat here is the GenCos.